KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday after two consecutive sessions of declines as Indonesia’s plan to hike its October reference price bolstered sentiment.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 43 ringgit, or 1.08%, to 4,038 ringgit ($969.74) a metric ton by the midday break.
The contract fell 3.71% over the last two sessions.
Indonesia’s move to hike the crude palm oil (CPO) reference price by $54 to $893.64 per ton for October supported Bursa Malaysia Derivatives palm oil prices, with the market trading 50 points higher this morning, said Marcello Cultrera, a grains, oilseeds and softs broker at SSY Global.
“This adjustment has also tightened the Indonesian palm discount, narrowing from $59.5 to $28.5 by yesterday afternoon.”
Indonesia will raise its CPO reference price for October to $893.64 per ton from $839.53 in September, trade ministry official Farid Amir told Reuters.
The new price will put the export tax for October at $74 per ton.
The ringgit, palm’s currency of trade, weakened 1.04% against the dollar, making the commodity cheaper for buyers holding foreign currencies. Soyoil prices on the Chicago Board of Trade fell 0.74%.
Dalian’s vegetable oil markets were closed for China’s Golden Week holiday. Palm oil tracks price movements of rival edible oils as they compete for a share of the global vegetable oils market.
Palm falls for 2nd session on stronger ringgit but logs monthly gain
Cargo surveyors ITS and AmSpec Agri estimate that exports of Malaysian palm oil products rose 0.8% and 1.1%, respectively, in September.
Oil prices were little changed as stronger supply prospects and tepid global demand growth outweighed worries that escalating tensions in the Middle East could impact output from the key exporting region.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Palm oil may stabilize around support at 3,981 ringgit and bounce to 4,067 ringgit per metric ton, Reuters technical analyst Wang Tao said.